BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 692|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
VETO
Bill No: SB 692
Author: Vidak (R)
Amended: 6/29/16
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE: 11-0, 4/14/15
AYES: Hall, Berryhill, Block, Gaines, Galgiani, Hernandez,
Hill, Hueso, Lara, McGuire, Vidak
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 36-0, 5/11/15
AYES: Allen, Bates, Beall, Berryhill, Block, Cannella, Fuller,
Gaines, Galgiani, Hall, Hancock, Hernandez, Hertzberg, Hill,
Hueso, Huff, Jackson, Lara, Leno, Leyva, McGuire, Mendoza,
Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan,
Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Anderson, De León, Liu
SENATE FLOOR: 38-0, 8/24/16
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Moorlach,
Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone, Vidak,
Wieckowski, Wolk
NO VOTE RECORDED: Monning
ASSEMBLY FLOOR: 78-0, 8/11/16 (Consent) - See last page for
vote
SUBJECT: Gambling: California Gambling Control Commission
SOURCE: Lucky Chances Casino
SB 692
Page 2
DIGEST: This bill prohibits a member of the California Gambling
Control Commission (CGCC), the executive director, chief, and
any employee of the CGCC or the Department of Justice (DOJ) from
holding an interest in, holding employment with, representing,
appearing for, or negotiating on behalf of a gambling
establishment, gambling enterprise, registrant, or licensee for
a period of two years after leaving office or employment.
ANALYSIS:
Existing law:
1)Provides, under the Gambling Control Act (Act), for the
licensure and regulation of various legalized gambling
activities and establishments by the CGCC and the
investigation and enforcement of those activities and
establishments by DOJ.
2)Specifies qualifications for eligibility as a member of the
CGCC and provides that a person is ineligible for appointment
if, within two years prior to appointment, the person was
employed by, retained by, or derived substantial income from,
a gambling establishment.
3)Prohibits a member of the CGCC, the executive director, the
chief, and any employee of the CGCC or the department
designated by regulation, for a period of three years after
leaving office or terminating employment, for compensation,
from acting as agent or attorney for any other person before
the CGCC or the DOJ, if the appearance or communication is for
the purpose of influencing administrative actions, as
specified.
4)Defines a "key employee" as a natural person employed in the
operation of a gambling enterprise in a supervisory capacity
or empowered to make discretionary decisions that regulate
gambling operations, including, among others, pit bosses,
shift bosses, gambling operation managers and assistant
managers, or any other natural person designated as a key
employee by the DOJ for reasons consistent with the policies
SB 692
Page 3
of the Act.
This bill prohibits a member of the CGCC, the executive
director, chief, and any employee of the CGCC or the DOJ from
holding a direct or indirect interest in, holding employment
with, representing, appearing for, or negotiating on behalf of a
gambling establishment, gambling enterprise, registrant, or
licensee for a period of two years after leaving office or
employment.
Background
Purpose of the bill. According to the author, while there are
regulations in place to stop the revolving door for past members
and employees to not directly lobby the Bureau of Gambling
Control (Bureau) and the CGCC, there is no revolving door
prohibition on members and employees who go to work for a
gambling establishment. The author further contends that over
the years, former Bureau employees have resigned and immediately
started consulting with tribal casinos and cardrooms.
Attorney General's accusation. On December 23, 2014, the
Attorney General's Office filed an accusation against Bob Lytle,
former director of the Division of Gambling Control from 2002
until his retirement in 2007. In the accusation, the state
alleged that Lytle began negotiating a new job with a cardroom
in San Jose while he was still in charge of cardroom regulation.
Lytle retired from the Division of Gambling Control on December
30, 2007, and began working as a consultant for a cardroom in
San Jose, on December 31 of that same year.
The accusation also alleged that Lytle began working as a
representative of the cardroom, and contacted both the Bureau
and the CGCC many times on behalf of his client. Additionally,
the accusation also stated that between 2012 and 2013, Lytle
asked for and obtained confidential information from the
Bureau's special agent in charge. Furthermore, the state
alleged that the two exchanged over 180 phone calls as well as
text messages and emails.
In May 2016, Lytle and state prosecutors reached a settlement
agreement where Lytle agreed to surrender his card room licenses
SB 692
Page 4
and pay a fine to resolve the allegations that he had abused his
connections to benefit a consulting client.
Related/Prior Legislation
AB 2526 (Hall, 2012) would have revised several definitions
within the Act. Specifically, the bill revised the definition
of a "key employee," added surveillance managers and supervisors
to the definition of "key employee" for licensing purposes,
deleted the term "pit boss," and replaced the term "shift boss"
to "shift manager." (Held on the Senate Inactive File)
SB 730 (Florez, Chapter 438, Statutes of 2007) made various
changes to the licensing and regulatory processes related to key
employees for gambling establishments under the Act.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee,
insignificant fiscal impact to CGCC and DOJ.
SUPPORT: (Verified10/18/16)
Lucky Chances Casino (source)
Artichoke Joe's Casino
OPPOSITION: (Verified10/18/16)
None received
ARGUMENTS IN SUPPORT: According to Artichoke Joe's Casino, the
"cooling-off" requirements proposed under this bill are similar
to laws imposed on other key California policy-makers in order
to avoid conflicts of interest. Therefore, it seems appropriate
that the CGCC, which oversees the highly regulated gaming
industry, should have the same "cooling-off" period.
SB 692
Page 5
GOVERNOR'S VETO MESSAGE:
I am returning Senate Bill 692 without my signature.
This bill prohibits all employees of the California
Gambling Control Commission and the Department of Justice
from holding employment with a gambling enterprise for a
period of two years after leaving state service.
This bill is overly broad. It applies to all 4,800
employees of the Department of Justice, regardless of
whether they have any responsibilities related to gambling
activities. A more targeted bill would be in order.
ASSEMBLY FLOOR: 78-0, 8/11/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine,
Linder, Lopez, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Roger Hernández, Low
Prepared by:Felipe Lopez / G.O. / (916) 651-1530
10/19/16 9:50:41
**** END ****
SB 692
Page 6